IMF Significantly Raises China’s Economic Growth Forecast, Urges Global Cooperation to Reduce Trade Uncertainty

At 21:00 Beijing time on Tuesday evening, the International Monetary Fund (IMF) issued its July update to the World Economic Outlook, entitled Tenuous Resilience amid Persistent Uncertainty. While revising global growth forecasts upward, the IMF cautioned that the recovery remains fragile. The report advocates for enhanced trade negotiations to foster a more predictable environment and reduce tariffs—aims intended to reinforce global growth, confidence, and sustainability.

As reported by China Central Television (CCTV) and Yicai, the IMF projects global economic growth rates of 3.0% in 2025 and 3.1% in 2026, representing increases of 0.2 and 0.1 percentage points compared to its April projections. Despite the adjustment, the 2025 growth estimate still trails last year’s 3.3%, largely reflecting the continued impact of U.S. tariffs on global performance.

Among leading economies, the IMF upgraded China’s growth forecast for 2025 by 0.8 percentage points to 4.8%, citing unexpectedly strong performance in the first half of the year and lower-than-expected U.S.-China tariffs compared to prior assumptions. Although exports to the United States declined, this was offset by increased shipments to other international markets. Fiscal policies also helped drive domestic consumption, supporting overall growth.

The United States is now expected to grow at rates of 1.9% in 2025 and 2% in 2026. Meanwhile, the Eurozone’s projections for the same period have been adjusted upward to 1% and 1.2%, respectively. However, the report does not yet reflect the preliminary trade agreement between the U.S. and Europe, which entails a 15% tariff on nearly all European imports—a development anticipated to have adverse effects on both regions' economies.

Additionally, the IMF notes that due to trade-related pressures, inflation in the U.S. is expected to remain above the 2% target through 2026. IMF Chief Economist Pierre-Olivier Gourinchas remarked, “Although the trade shocks may not be as severe as initially feared, their scale remains significant, and there is growing evidence that this is harming the global economy. The current trade environment remains precarious.”

The report emphasizes that global growth momentum is expected to moderate as the resilience spurred by trade distortions wanes. Even if tariff levels remain constant and no further protectionist actions are taken, high levels of trade policy uncertainty may increasingly affect economic activity.

The IMF calls for pragmatic international cooperation to ease policy-driven volatility. It underscores the importance of trade negotiations focused on lowering barriers to commerce and investment, cautioning against imposing new restrictions that may intensify tensions with third-party nations.

Ahead of this week’s Federal Reserve policy deliberations, the IMF also highlights the need for central banks to maintain clear and consistent communication amid an uncertain backdrop, and to uphold their institutional independence—not merely as a legal concept, but as an operational principle. This advice arrives amid mounting scrutiny of Federal Reserve Chair Jerome Powell.